Confidence among the state’s employers saw a downturn in March, reversing slight gains seen in February and following the failure of several banks and while inflation continues to push prices and wages higher.
“Business confidence fell precariously close to pessimistic territory during March as Massachusetts employers managed challenges ranging from inflation to rising interest rates to banking disruptions,” the Associated Industries of Massachusetts wrote in their March Business Confidence Index.
According to the survey of Bay State employers, confidence fell from February to March by a full 2-points, slipping from 53.5% confidence to 51.5%. According to AIM’s math, that means businesses are feeling optimistic, but just barely, and that’s the lowest confidence the index has shown since October of last year.
Sara Johnson, who chairs AIM’s board of economic advisors, said with the release of the index that improving economic activity elsewhere can account for retreating fears of a looming recession but that the index still shows employers are facing too tough a market for talent.
“At the global level, we see recession averted, thanks to solid growth in mainland China and the
emerging markets of Asia Pacific. The US economy had a strong start to 2023, but tightening financial conditions could undermine growth over the remainder of the year. Labor market conditions remain tight, keeping inflation above central bank targets in the US and Western Europe,” she said.
This comes on the heels of nearly benchmark labor numbers for March — the Bureau of Labor Statistics says the nation gained 236,000 jobs, about 3,000 less than was forecast — and while the Biden Administration celebrated historically low unemployment numbers.
“My economic agenda has powered an historic economic recovery. We’ve created 12.6 million jobs since I took office. The unemployment rate is close to the lowest it has been in more than 50 years and a record low for African Americans,” President Joe Biden said in a statement provided by the White House following the Friday release of the jobs report.
That low unemployment rate is not helping employers when it’s time to find workers, a problem that has persisted for those businesses surveyed in AIM’s monthly index for most of the last year and which the association says is forcing companies “to scour a tight labor market for qualified workers.”
AIM surveys more than 140 Bay State businesses to produce their monthly index, which they have published for more than three decades. According to AIM, business confidence hit historic highs in 1997 and 1998, with two months in either year showing 68.5% confidence, and hit a low in February of 2009, when it was 33.3%.
